Closing the Skills Gap

University Health System, a public hospital in San Antonio, faced a critical shortage of nurses in 2001, with the vacancy rate climbing to 21 percent. Without new nurses, the hospital might be forced to curtail or shut down some key emergency functions.

Contract nursing providers could fill the gap quickly. But the hospital decided to gamble on a training and development program, hoping to create a long-term pipeline of new nurses, some of whom would be culled from the hospital’s own unskilled worker ranks. The strategy included nursing school scholarships and training assistance, and it worked so well that the hospital’s nursing vacancy rate is down to 4.59 percent today.

"We did not take a path most others took, getting traveling nurses or agency nurses," says Jacque Burandt, administrative director of staff development at University Health System. "We were looking for longevity and commitment, and to reward our own staff. So we chose to grow our own instead."

University Hospital’s solution to its staffing shortage was so successful that it was cited as one of several innovate approaches in a new report by the American Society for Training and Development on the growing national skills gap—the disconnect between an organization’s skill needs and the capabilities of its current workforce. ASTD’s "Bridging the Skills Gap" defines the seriousness of the skills shortage in corporate America and also poses a series of solutions for both organizations and government. University Hospital is one of seven case study successes highlighted in the report.

"If you are facing a skills gap, or just starting to look at it, you can use this paper as a tool," says Jennifer Homer, ASTD’s vice president of external relations. "One of the purposes of developing this paper was to help organizations move beyond talking about the issue and have a plan and process to address skill gaps in their companies."

A primary target of the report is corporate human resources divisions, which include the training and development functions at many large corporations. Burandt works in the human resources department of University Hospital, for example, and the solutions developed by the hospital required a significant financial commitment from its human resources budget.

As University Health demonstrated, organizations that think creatively can often develop the skills they need from within their own workforces. When the hospital began looking into the nursing shortage in 2001, it considered using foreign nurses, traveling nurses programs or staffing firms that provide nurses under contract. The hospital also considered offering large signing bonuses to recruit nurses from other hospitals. But the hospital decided that some of those options (particularly the idea of paying signing bonuses) were expensive and might cause morale problems by establishing two distinct tiers of nurses.

So the hospital began looking closer at its 5,400-member workforce. While the hospital has about 950 nurses, it also has hundreds of unskilled workers serving in housekeeping, maintenance and cafeteria jobs. The hospital determined that many of those workers would welcome the chance to move up to more skilled and higher paying jobs but lacked the time or resources to do so.

So the hospital launched a certified nursing assistant program under which a local community college offered courses on site toward a medical technician certificate, which is often a first step to becoming a nurse. The program has been a hit with the hospital’s lower-skilled workers.

To encourage continued education toward a full nursing degree or certificate, the hospital partnered with local nursing schools to fund a $3,000-per-year nursing scholarship program open not only to hospital workers but to other students as well. The catch: graduates must agree to work for University Health for periods ranging from two to three years. To help make sure the nursing schools had enough faculty, the hospital arranged for professional staff members to teach the courses. The program is funded through a government grant.

The series of initiatives worked so well that the hospital now has a steady stream of new nurses lining up to fill open slots. The scholarship program has proven so successful that it was recently put on temporary hiatus because the hospital has all the nurses it can handle at the moment.

While University Health was working to solve its skills gap, other companies are only now beginning to realize the problems they face. The ASTD report notes that over the last few years, the looming skills gap has generated considerable discussion and attention but not enough training and development action.

In an online poll conducted by ASTD between December, 2005 and January, 2006, 96 percent of the 396 respondents said they had a skills gap within their organizations or expected one within a year.

Several factors contribute to the gap. Jobs are changing, requiring higher skill levels. In 1950, 80 percent of all U.S. jobs were classified as unskilled. Today, 85 percent of jobs are classified as skilled, which means they require some training beyond high school.

Until recently, the U.S. education system was doing a decent job of keeping up with the higher demands. Between 1980 and 2000, the U.S. increased the number of workers with some education or training beyond high school by 19 percent. But that growth is expected to slow to 4 percent between 2000 and 2020, which is not enough to keep pace with demand for higher skills. Unchecked, the trend could result in a shortage of 14 million skilled workers by 2020.The lack of skilled workers is compounded by an overall labor shortage brought on by demographic trends. There are not enough younger workers in the U.S. to replace all the slots being vacated by the retiring Baby Boom generation, according to the ASTD report.

Gaps are showing up in four areas: Basic skills like reading, writing and arithmetic; technical and professional skills; management and leadership skills and emotional skills like persistence, self-discipline and self-awareness.

Highest on the list of needed skills are those associated with management and leadership. In one study cited in the ASTD paper, 70 percent of companies reported moderate to major leadership shortages, and many expected the problem to get worse.

As one example of how a company can insure it has enough leaders, the ASTD paper cited Caterpillar Inc., the Peoria, Ill.-based construction and mining equipment maker. The company currently has 92,000 employees around the globe and expects it will have to hire about that many by 2020 to accommodate retirements, turnover and anticipated growth to 120,000 employees. The challenge for the company is to get enough leaders and managers in place to effectively run the company by then.

Working with management consultant Hay Group, Caterpillar launched a leadership development initiative through its Caterpillar University, which is housed in the company’s human resources division. The effort began with a series of high-level meetings and strategy sessions in 2001 and updated in 2003 involving top executives. They defined 11 characteristics and qualities the company sought in its managers and leaders.

The company and Hay Group came up with a program called Making Great Leaders, based around those 11 core skills and attributes. The program includes a two-day training seminar as well as follow-up tasks and surveys to track how well those skills are being used.

"We help our global employees understand what it means to be part of Caterpillar, what it looks like to be Caterpillar leader, and how we, as a corporation, grow and develop them," says Deb Nelson, senior learning consultant at Caterpillar University.

So far, some 5,000 managers and executives have gone through the program.

Nelson says the program has enabled Caterpillar to find and develop sufficient leaders from within its ranks to fill its needs. "It is a proactive means by which we look to not have a gap," she says.

The Caterpillar and University Health examples both illustrate some of the fundamental steps outlined in the ASTD report for dealing with the skills gap. The report notes that instead of reacting to the skills gap with short-term actions, companies need to take a more long-term and proactive approach to identifying needs and forging solutions. ASTD came up with a six-phase action plan:

Identify core business functions and make sure they correspond to strategies and goals.

Assess any skills gap. Quantify needed skills and current workforce makeup. Determine where gaps may appear and identify them by location, type and severity.

Set methods and goals to fill the gap. Determine if the needed skills will come from within an organization or must be recruited from outside.

Implement solutions. Set up learning programs and other methods for acquiring needed skills.

Measure results. Set up tracking methods both for individuals and for the organization, and make sure results are communicated to others in the organization.

While most of the ASTD report focuses on how organizations can identify and resolve skill gaps, one section addresses the role of government in dealing with the problem.

Government programs offer a wide range of training and development opportunities for individuals, the report notes. ASTD recommends more focused cooperation between government and employers to match programs with specific skill needs.

For example, ASTD suggests that government agencies could become clearinghouses of best practices strategies, providing companies with information and assistance in dealing with skills shortages. Better and closer coordination with employers would help institutions like community colleges better tailor instruction to regional workforce needs. There are several suggestions for using tax dollars to help retrain older workers or those displaced by business closings or shifts.

While ASTD says its framework can help deal with the current skills gap, it points out that such gaps will always emerge in dynamic economies.

"In reality, organizations will always have skills gaps as they are growing and moving into new and different areas," says ASTD’s Homer. "There will always be new things and areas to learn. The key is to be able to strategically adapt, to be flexible and change with the times to attain the skills you need."

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